Correlation Between Boeing and Joby Aviation

Can any of the company-specific risk be diversified away by investing in both Boeing and Joby Aviation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Boeing and Joby Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boeing and Joby Aviation, you can compare the effects of market volatilities on Boeing and Joby Aviation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Boeing with a short position of Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Joby Aviation.

Diversification Opportunities for Boeing and Joby Aviation

0.12

Correlation Coefficient

Boeing  Joby Aviation

Average diversification

The 3 months correlation between Boeing and Joby is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation and Boeing is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Boeing are associated (or correlated) with Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Boeing i.e., Boeing and Joby Aviation go up and down completely randomly.

Pair Corralation between Boeing and Joby Aviation

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.31 times more return on investment than Joby Aviation. However, The Boeing is 3.26 times less risky than Joby Aviation. It trades about 0.12 of its potential returns per unit of risk. Joby Aviation is currently generating about -0.05 per unit of risk. If you would invest  15,544  in The Boeing on November 29, 2024 and sell it today you would earn a total of  1,842  from holding The Boeing or generate 11.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  Joby Aviation

Boeing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Joby Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Boeing and Joby Aviation

The main advantage of trading using opposite Boeing and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Joby Aviation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Joby Aviation will offset losses from the drop in Joby Aviation's long position.

The idea behind The Boeing and Joby Aviation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.